Performance Measurement and Incentive Intensity

Incentive Contracts and Performance Measurement

Multi-task incentive contract and performance measurement with multidimensional types

This paper provides a new explanation for the dominance of the low-powered incentive contract over the high-powered incentive contract using a hybrid model of moral hazard and adverse selection. We first show that unobservable risk aversion or cost leads to lowpowered incentives. We then consider the case where both risk aversion and cost of the agent are unobservable to the principal. This mul...

Social Capital, Corporate Culture and Incentive Intensity

We study a dynamic principal-agent problem where social capital is an important part of the system of incentives. In each period the firm chooses an incentive intensity, and its employees allocate effort between individual and cooperative tasks. Cooperative tasks are within bounds more pro­ ductive than individual tasks, but employees are not monetarily rewarded for them. Rather, and consistent...

Performance Measurement and Incentive Compensation: An Empirical Analysis and Comparison of Chinese and Western Firms' Practices

This paper describes the findings of a study aimed at providing a replication and extension in China of studies focused on incentive compensation practices of automobile retailers in the USA and the Netherlands. Rich, detailed data-sets from all three countries are analysed together and in comparison. As theory is not well developed at the level of detail of the data collected, the purpose of t...

Incentive Contracts and Environmental Performance Indicators

A principal-agent (P-A) model is used to analyse the effect of environmental performance indicators (EPI) on environmental risk sharing within the firm. To achieve due diligence, the principal (top management), having to use imperfect performance indicators and fearing penalties for environmental damages, wants to avoid environmental harm and induce the agent (employee manipulating hazardous ma...